Elder Law – Asset Allocation for Retirement Planning

When approaching retirement, it is important to think about the future of your assets. The value of certain assets may decrease as time goes on, which means an individual should obtain an understanding of where they want their assets to go. Should certain assets be sold? Should certain assets be given to beneficiaries? Certain methods of asset allocation, such as a sale, may incur costs that are not immediately obvious, such as through taxes. Therefore, it is crucial to know how to protect your assets and how to best transfer those you no longer wish to own.


Financial Protection

Being smart with money is a beneficial trait for everyone, not just those approaching retirement. The following five factors should be considered when planning a smooth retirement:

  1. Long-Term Health Costs– Long-term health care is rather expensive and needs to be thought about in a very clever way before spending large amounts of money. In fact, the average private-pay cost of a semiprivate room in nursing home is about $82,125 per year. Assisted living facilities average $43,539 per year. Home healthcare services are $125 a day.
  2. Life Expectancy– The longer one expects to live, the more carefully they must think about how they will ration their savings throughout the duration of their remaining life. Giving up ownership of too many assets around the time of retirement could result in a lack of access to resources later in life. As medical advances continue to lengthen individuals’ life expectancy, it is important to carefully consider asset allocation. The guaranteed income from a pension or Social Security may not cover all future expenses.
  3. Inflation– Unexpected inflation can affect one’s retirement spending power by disproportionately increasing the price of goods and services one is expected to receive without affecting their assets, ultimately reducing the individual’s buying power. To combat this, one look into investments that have the potential to help keep pace with inflation, such as growth-oriented investments (e.g., stocks or stock mutual funds), Treasury inflation-protected securities (TIPS), real estate securities, and commodities.
  4. Diversified Assets– Individuals should strive to balance their portfolio in a manner that combines assets which aren’t too risky with those which aren’t too safe. A simple method of doing this is to balance stocks and bonds, though the optimal portfolio varies from person to person.
  5. Withdrawing from Savings– Being conservative with regard to money is wise. It is too risky to overspend when the source of the money is a savings account. In order to be confident that savings will last for at least 25 years after retiring, consider withdrawing no more than 4%-5% in the first year.

Asset Law Protection

After all the hard work and effort put into a job after so many years, even decades, protecting your savings is crucial. There are state and federal laws available to ensure the safety of your assets. The best option would be to consult with a professional law firm to see the different choices available.

  1. Traditional and Roth IRA’s– This sort of protection refers to bankruptcy and does not apply to any other judgments.
  2. Qualified Retirement Plans- Employer-sponsored plan assets have unlimited creditor protection from bankruptcy, regardless of if they’re subject to the Employee Retirement Income Security Act, ERISA. Some of these include SEP IRA’s, defined-benefit, defined-contribution, 403(b), etc.
  3. Homesteads– The protection a person has for their home can vary from state to state.
  4. Life Insurance/Annuities– Each state, like homesteads, provides a different degree of protection via life insurance. Some states protect the cash surrender values of life insurance as well as the proceeds of annuity contracts in favor of the creditors. Other states protect the beneficiary, and some states do not provide any security.

Controlling the Future of Assets

When it comes to the future of one’s assets, the crucial consideration is the necessity of said assets. Only once you can determine this can you begin considering whether it is worth transferring ownership of these assets. For the assets you decide to keep, it is crucial that you consult with an asset protection attorney to ensure that no creditor can sue you for your possessions. For the assets you seek to give away, consult with an experienced NY elder law attorney to determine which type of trust will strike the proper balance of safety and control. Once you make this decision and properly allocate your assets, you may peacefully enjoy your retirement, knowing that you will remain financially secure for the rest of your days.